StepChange Consulting Selected Financial Benchmarking

Transcription

1 StepChange Consulting Selected Financial Benchmarking October 2016

2 Agenda Graphic Paper peer group Packaging peer group Tissue peer group Pulp peer group Flexible Packaging peer group 2

3 Financial benchmarking of graphic paper peer group. Companies exposed to publication papers remain challenged. Graphic paper peer group financial performance comparison ) Holmen Lecta 3) Mondi Group Norske Skog 4) Sappi Stora Enso The Navigator Company UPM 4) Domtar International Paper Resolute Forest Products Verso Paper Lee & Man 3) Graphic Paper Mitsubishi Paper 3)4) Nippon Paper 3) Oji Paper 3)4) Turnover, m 1,671 1,491 6,624 1,247 4,691 9,942 1,557 9,782 4,576 18,691 3,168 2,365 2,047 1,631 7,594 10,810 EBIT % 11% 3% 16% -19% 11% 9% 14% 11% 2% 7% 0% -9% 8% 2% 1% 3% EBIT % (segment 11% 3% 18% -18% 11% 6% 14% 3% 3% 7% 0% -9% 8% 2% 1% 3% only) 5) EBITDA% 19% 7% 22% 9% 15% 13% 25% 16% 10% 13% 6% -2% 13% 7% 7% 13% ROCE % 6% 6% 21% -28% 14% 10% 10% 9% 2% 5% 0% -13% 5% 4% 1% 3% ROA % 5% 4% 15% -21% 11% 7% 9% 8% 2% 5% 0% -10% 4% 2% 1% 2% ROE % 8% 38% 31% N/A 49% 16% 19% 14% 4% 36% -1% 18% 9% 10% 4% 5% WC % 14% 3% 12% 5% 10% 8% 15% 16% 14% 10% 16% 18% 28% 28% 20% 15% Debt % 42% 90% 51% 98% 77% 54% 54% 44% 53% 87% 55% 152% 52% 79% 69% 62% OCF % 14% 6% 16% 4% 6% 12% 22% 16% 8% 12% 4% 3% 20% 6% 5% 9% FCF % 15% 4% 9% 2% 4% 6% N/A 14% 0% 5% -2% 5% 3% 5% 6% 6% 1) All figures are based on extrapolations of H results unless otherwise stated Results of International Paper and Mondi Group highly influenced by segments other than graphics 3) Data presented is 2015 annual results because H results are not published yet 4) Profit results (EBIT and EBITDA) impacted by non-recurring items 5) Segment data are available for Domtar, International Paper, Holmen, Mondi, Norske, UPM, Stora Enso, Resolute Forest Products ROCE % = EBIT including non-recurring items / (Total Assets Current Liabilities) ROA % = EBIT including non-recurring items / Total Assets ROE % = EBIT including non-recurring items / Total Equity WC % = (Accounts Receivable excl. fin. items + Inventories Accounts Payable excl. fin. items) / Turnover Debt % = Total Liabilities / Total Assets OCF / TO% = Operating Cash Flow / Turnover FCF / TO% = Free Cash Flow excluding Investing Cash Flow for M&A / Turnover 3

4 The graphic paper segment data shows a slight increase compared to UWF producers with good results. Segment-only EBIT % of graphic paper segments (incl. special items) 1) 20% 15% 10% 5% 0% -5% -10% Segment only W. Avg. 2015: 3.4% W. Avg. 2016: 4.3% 1) -15% -19% -25% H weighted average H weighted average Graphics segment: International Paper: Printing paper; Domtar: Pulp & Paper; Holmen: Holmen Paper; Mondi: Uncoated Fine Paper; Norske: Newsprint & Magazine Paper since 2014: Publication paper Europe & publication paper Australasia; RFP: Newsprint & Specialty Paper; UPM: UPM Paper ( & UPM Paper Asia & UPM Paper ENA ( ); Stora: Newsprint and book paper, magazine paper, fine paper ( ) & Printing & reading ( ), Resolute Forest products: Newsprint and Specialty paper Trends vary significantly across companies. Majority of graphic segments - Holmen, Mondi, Stora Enso, Resolute Forest Products and UPM - improved EBIT. 1) 2016 results are based on H extrapolations unless otherwise stated Excl. Lecta and all Asian companies 3) 2015 results influenced by higher sales price in Russia & lower costs of wood, chemical & energy 4) Increased EBIT due to good production, better product mix following the launch of the new Holmen UNIQ product and lower depreciation 5) Significantly influenced by non-recurring items; Norske Skog significantly influenced by restructuring expenses 4

5 Working capital levels differ across companies and regions. Average increased by 0.2pp vs Working capital as % of turnover 1) 35% 30% 36% Graphic Paper W. Avg. 2015: 12.4% W. Avg. 2016: 12.6% 1) 25% 20% 15% 10% More information available upon request. Please contact Mrs. Kristi Magllara at: kristi.magllara@stepchange.com 5% 0% H weighted average H weighted average Lecta and Norske with lowest levels. Lee & Man and Mitsubishi Paper still with the highest working capital despite continuous improvement. 1) 2016 results are based on H extrapolations unless otherwise stated Excl. Mondi and International paper since they are highly active in other segments as well. Excl. all Asian companies and Lecta due to no available data for ) including some non-operational items due to reporting structure 4) Payables including high amount of non-operational items 5

6 Agenda Graphic Paper peer group Packaging peer group Tissue peer group Pulp peer group Flexible Packaging peer group 6

7 Financial benchmarking of packaging peer group. H results reveal deteriorated positive performance. Comparison of financial performance for packaging peers ) Packaging Billerud- Korsnäs DS Smith 1) Mayr- Melnhof Metsä Board Mondi Group Smurfit Kappa Stora Enso Cascades Graphic International Pack. Corp. of KapStone Packaging Paper America 1) West- Rock Nine Dragons Paper Rengo 1) Klabin Turnover, m 2,339 5,506 2,284 1,717 6,624 8,098 9,942 2,696 3,829 18,691 2,729 5,050 13,425 4,668 4,016 1,531 EBIT % 11% 6% 10% 8% 16% 10% 9% 7% 10% 7% 5% 14% -3% 13% 3% 25% EBIT % (segment 11% 6% 10% 10% 12% 10% 10% 7% 10% 12% 5% 14% -3% 13% 3% 25% only) EBITDA% 17% 10% 14% 13% 22% 15% 13% 12% 17% 13% 11% 20% 16% 19% 8% 33% ROCE % 12% 10% 14% 8% 21% 12% 10% 9% 11% 5% 5% 16% -2% 9% 4% 6% ROA % 9% 6% 11% 6% 15% 9% 7% 7% 9% 5% 5% 14% -2% 6% 2% 6% ROE % 19% 22% 19% 13% 31% 35% 16% 27% 39% 36% 18% N/A -4% 16% 7% 21% WC % 11% -5% 19% 19% 12% 7% 8% 12% 11% 10% 15% 15% 14% 11% N/A 42% Debt % 52% 72% 39% 53% 51% 74% 54% 73% 77% 87% 73% 69% 56% 61% 66% 74% OCF % 13% 9% 9% -5% 16% 6% 12% 5% 12% 12% 6% 13% 11% 19% N/A 33% FCF % 7% -3% 2% -17% 9% 1% 6% 1% 3% 5% 1% 9% 5% 14% N/A -14% 1) Data presented is 2015 annual results because H results are not published yet Segment data are available for International Paper, Metsä Group, Mondi, Stora Enso ROCE % = EBIT including non-recurring items / (Total Assets Current Liabilities) ROA % = EBIT including non-recurring items / Total Assets ROE % = EBIT including non-recurring items / Total Equity WC % = (Accounts Receivable excl. fin. items + Inventories Accounts Payable excl. fin. items) / Turnover Debt % = Total Liabilities / Total Assets OCF / TO% = Operating Cash Flow / Turnover FCF / TO% = Free Cash Flow excluding Investing Cash Flow for M&A / Turnover 7

8 PCA outperforms both in terms of EBITDA and revenue development. Mondi and Nine Dragons with high EBITDA but moderate growth. EBITDA average as % vs. Revenue growth as % CAGR year EBITDA average [%] Packaging 21% 18% 15% Stora Enso Graphic Packaging Metsä Board Mondi Group Nine Dragons Paper International Paper Pack. Corp. of America 12% Smurfit Kappa Mayr-Melnhof 9% Rengo Cascades DS Smith 6% 3% 0% -6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 34% Unlike the graphic paper peer group, only 4 companies with a negative revenue growth in the packaging peer group *Klabin excluded due to significantly higher EBITDA level outside of graphic scope BillerudKorsnäs 3 year revenue growth [CAGR] 8

9 H packaging segment EBIT decreased by 1.8pp compared to 2015 Segment-only EBIT % of packaging segments (incl. special items) 1) 20% Segment only W. Avg. 2015: 10.3% 24% 35% 26% W. Avg. 2016: 8.5% 1) 25% 15% 10% 5% More information available upon request. Please contact Mrs. Kristi Magllara at: kristi.magllara@stepchange.com 0% -5% H weighted average H weighted average Packaging segment: International Paper: Industrial & Consumer Packaging; Metsä Board: Paperboard; Mondi: All except Uncoated Fine, South Africa and formerly Newsprint; Stora Enso: Packaging Solutions division and Consumer Board division (former Renewable Packaging) Mondi Group improving since Klabin outperforming the peer group. WestRock the only company with negative EBIT. 1) 2016 results based on H extrapolations unless otherwise stated Excl. DS Smith and Rengo 3) Segment definition changed since ) 2014 result highly influenced by non-recurring items like restructuring, goodwill impairment and other special charges result affected by acquisitions 5) Results restated 6) 2015 results impacted by maintenance outage results impacted by maintenance outage and lower prices of containerboard & export kraft paper. 7) 2016 result highly influenced by restructuring costs 8) 2015 results significantly affected by loss on disposal of property 9

10 Agenda Graphic Paper peer group Packaging peer group Tissue peer group Pulp peer group Flexible Packaging peer group 10

11 Financial benchmarking of tissue peer peer group. Hengan outperforms, Cascades improves compared to Tissue peer group financial performance comparison ) Tissue SCA Cascades Clearwater Paper Kimberly-Clark Kruger Products Orchids Paper 5) Hengan International 5) Turnover, m 12,321 2,696 1,566 16, ,841 EBIT % 9% 7% 9% 18% 7% 12% 25% EBIT % (segment only) 6) 10% 3)5) 10% 3) 7% 4) 18% 7% 12% 25% EBITDA % 15% 12% 14% 22% 11% 18% 29% ROCE % 9% 9% 12% 34% 8% 8% 34% ROA % 7% 7% 10% 22% 6% 8% 16% ROE % 15% 27% 32% N/A 25% 15% 34% WC % 6% 12% 11% 9% 9% 11% 15% Debt % 55% 73% 68% 97% 74% 47% 54% OCF % 11% 5% 11% 16% 9% 11% 18% FCF % 5% 1% 4% 11% 2% -33% 12% 1) All figures are based on extrapolations of H results unless otherwise stated EBIT of the full company, not of a specific segment 3) SCA and Cascades tissue segment: Tissue segment as in the financial reports 4) Clearwater paper tissue segment: Consumer products segment as in the financial report 5) Data presented is 2015 annual results because H results are not published yet 6) Segment data are available for SCA, Cascades and Clearwater Paper ROCE % = EBIT including non-recurring items / (Total Assets Current Liabilities) ROA % = EBIT including non-recurring items / Total Assets ROE % = EBIT including non-recurring items / Total Equity WC % = (Accounts Receivable excl. fin. items + Inventories Accounts Payable excl. fin. items) / Turnover Debt % = Total Liabilities / Total Assets OCF / TO% = Operating Cash Flow / Turnover FCF / TO% = Free Cash Flow excluding Investing Cash Flow for M&A / Turnover 11

12 Average EBIT up by 8.1pp. Hengan and Kimberly-Clark are leading the peer group. Segment-only EBIT % of tissue segments (incl. special items) 1) 19% Segment only W. Avg. 2015: 8.1% 1) W. Avg. 2016: 16.2% 26% 24%24% 25% 14% 9% 4% -1% H weighted average H weighted average Segment Tissue: Metsä Group: Tissue and Cooking Papers; SCA: Tissue; Cascades: Tissue; Clearwater Paper: Consumer products Improving EBIT across the segment in H ) 2016 results are based on H extrapolations unless otherwise stated Excl. SCA, Orchids Paper, Wausau Paper and Hengan International due to non-available data for ) H data not available 4) 2016 results impacted by higher sales (higher prices), favorable CAD FX rate, lower energy costs. Impact from NRI like restructuring costs and derivative fin. Instruments 5) 2015 results impacted by non-recurring items; 2016 results impacted by reduction of input costs, savings due to FORCE cost savings as well as special items such as pension settlement 6) Wausau Paper acquired by SCA in ) 2014 EBIT% drop driven by increased cost of sales and SG&A expenses 12

13 Working capital increased by 1pp vs Tissue peer group average on a low level compared to other peer groups. Working capital as % of turnover 1) 15% 13% 11% 9% 7% 5% 3% 1% -1% -3% -5% Tissue W. Avg. 2015: 7.3% W. Avg. 2016: 8.3% 1) 21% 21% More information available upon request. Please contact Mrs. Kristi Magllara at: kristi.magllara@stepchange.com H weighted average H weighted average SCA stable below average. Clearwater paper and Kruger Products struggling to keep working capital down. 1) 2016 results are based on H extrapolations unless otherwise stated Excl. Orchids, Wausau and Hengan due to non-available data for ) H data not available 4) In 2013 the specialty paper operations were discontinued; effecting the overall levels of WC in the following years 5) Payables include a small amount of loan in the non-separable other payables position; deferred tax excluded from due to changed accounting policies as of 2015; receivables including some minor non-separable financial items 6) WC calculated with trade receivables and trade payables only; H receivables including some minor non-separable financial items 7) Receivables and payables including some minor non-separable financial items 8) Payables including some minor non-separable financial items 13

14 Agenda Graphic Paper peer group Packaging peer group Tissue peer group Pulp peer group Flexible Packaging peer group 14

15 Financial benchmarking of pulp peer group. Turnovers decreased vs Majority of the companies had a weakening EBIT. Pulp peer group financial performance comparison ) Turnover, m Altri Ence 3) Metsä Group Rottneros 3) Södra 3) Stora Enso UPM Canfor Catalyst Paper Domtar Tembec Mercer International Weyerhaeuser Pulp Arauco 3) CMPC 4) Eldorado , ,952 9,942 9, ,308 4, ,483 4,636 4, ,314 2,523 EBIT % 21% 20% 10% 15% 12% 9% 11% 8% -2% 2% 10% 5% 13% 14% 8% 47% 23% 29% EBIT % (segment 21% 19% 18% 15% 26% 20% 21% 7% 4% 2% 10% 4% 10% 14% 17% 47% 23% 29% only) 6) EBITDA% 29% 29% 15% 18% 17% 13% 16% 14% 1% 10% 17% 9% 21% 22% 17% 55% 44% 42% 5) ROCE % 15% 13% 11% 24% 16% 10% 9% 13% -5% 2% 8% 9% 4% 6% 3% 18% 8% 12% ROA % 12% 11% 8% 19% 11% 7% 8% 11% -4% 2% 8% 6% 4% 5% 3% 13% 7% 11% ROE % 40% 23% 18% 25% 18% 16% 14% 19% 24% 4% 22% 173% 9% 11% 5% 110% 15% 28% WC % 10% 0% 10% 13% 15% 8% 16% 12% 9% 14% 18% 20% 3% 22% 31% 33% 20% 27% Debt % 71% 53% 55% 24% 38% 54% 44% 45% 115% 53% 66% 96% 57% 52% 46% 88% 52% 61% OCF % 31% 17% 1% 19% 17% 12% 16% 14% 0% 8% 16% 8% 18% 17% 15% -11% 42% 26% FCF % 26% 13% -13% 13% 1% 6% 14% 8% -2% 0% 12% 5% 27% 7% 7% -34% -36% 45% Fibria Suzano 1) All figures based on extrapolations of H results unless otherwise stated OCF % and FCF % as of ) Data presented is 2015 annual results because H results are not published yet 4) Segment EBIT % as of ) "Adjustment to fair value" considered as impairment 6) Pulp segments: Ence: Pulp and Forestry, Metsä Group: Metsä Fiber Group (Pulp industry), Södra: Södra Cell, Stora Enso: Biomaterials, UPM: Biorefining, Eldorado: Cellulose, Canfor: Pulp, Catalyst Paper: Pulp, Tembec: Paper Pulp + Specialty Cellulose Pulp, Weyerhaeuser: Cellulose fibers, CMPC: Pulp ROCE % = EBIT including non-recurring items / (Total Assets Current Liabilities) ROA % = EBIT including non-recurring items / Total Assets ROE % = EBIT including non-recurring items / Total Equity WC % = (Accounts Receivable excl. fin. items + Inventories Accounts Payable excl. fin. items) / Turnover Debt % = Total Liabilities / Total Assets OCF / TO% = Operating Cash Flow / Turnover FCF / TO% = Free Cash Flow excluding Investing Cash Flow for M&A / Turnover 15

16 average Long-term perspective - Fibria with highest EBITDA average and ~6% revenue growth over 2 years. Eldorado and Suzano outperform EBITDA average as % vs. Revenue growth as % CAGR year EBITDA average [%] Pulp 50% Fibria 40% Suzano Eldorado 30% 20% Ence 10% Stora Enso Tembec 0% Mercer International Södra UPM Metsä Group Weyerhaeuser Altri Ence and Tembec shrinking in turnover Arauco Canfor CMPC Domtar Rottneros Catalyst Paper -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% average 2 year revenue growth [CAGR] 16

17 Segment-only results show the positive impact on results of conglomerates. Overall, EBIT down by 3.3pp. Segment-only EBIT % of pulp segments (incl. special items) 1) 30% 25% 20% 15% 10% 5% 0% Segment only W. Avg. 2015: 19.4% W. Avg. 2016: 16.1% 1) 45% 47% 35% 30% More information available upon request. Please contact Mrs. Kristi Magllara at: kristi.magllara@stepchange.com -5% -17% -11% H weighted average H weighted average Eldorado is the best performer in the pulp segment. Suzano sustains high level, Altri, Metsä, Stora and UPM above peer group average in H ) 2016 results based on H extrapolations unless otherwise stated Excl. Ence, Rottneros, Södra and Arauco because no H report is yet available 3) 2015 influenced by positive FX impact on exports & ongoing projects to reduce w ood and chemicals consumption influenced by decrease in BHKP price, depreciation of EUR/USD, planned annual stoppages for maintenance 4) 2014 influenced by negative non-recurring items like impairments and closure costs of Huelva effected by less non-recurring items and lower sales cost 5) 2015 influenced by increase in sales of pulp weakening EUR against USD 6) 2015 results impacted by increased productivity 7)Impacted by positive exchange rate: weakening of SEK against USD and increa sed sales volume 8) 2015 results impacted by higher hardwood pulp sales prices in local currencies, favorable foreign exchange rate impact, increased sales volumes and lower wood and energy costs 9) 2016 results impacted by lower NBSK pulp sales as well as major maintenance outages 10) 2016 results impacted by lower sales volumes, lower average transaction prices partially offset by weaker CAD, Increased costs of chemical, steam fuel, maintenance and labor costs 11) 2016 impacted by lower sales & production and sales realizations 1 Result 2014 is restated Pulp segments: Ence: Pulp and Forestry, Metsä Group: Metsä Fiber Group (Pulp industry), Södra: Södra Cell, Stora Enso: Biomaterials, UPM: Biorefining, Eldorado: Cellulose, Canfor: Pulp, Catalyst Paper: Pulp, Tembec: Paper Pulp + Specialty Cellulose Pulp, Weyerhaeuser: Cellulose fibers, CMPC: Pulp 17

18 Agenda Graphic Paper peer group Packaging peer group Tissue peer group Pulp peer group Flexible Packaging peer group 18

19 Financial benchmarking of flexibles peer group. Mondi and Aptar keep performing well. Flexibles peer group financial performance comparison ) Flexibles Amcor Aptar Group Constantia Flexibles Huhtamaki Mondi Group Bemis Coveris Sealed Air Rengo Turnover, m 8,240 2,154 1,899 2,829 6,624 3,564 2,336 5,944 4,016 EBIT % 11% 14% 6% 10% 16% 9% 5% 12% 3% EBIT % (segment 12% 14% 6% 9% 8% 9% 6% 12% 3% only) 3) EBITDA% 15% 20% 13% 13% 22% 14% 11% 16% 8% ROCE % 22% 15% 9% 14% 21% 12% 8% 14% 4% ROA % 12% 12% 7% 10% 15% 10% 6% 10% 2% ROE % 80% 26% 31% 25% 31% 29% N/A 133% 7% WC % 4% 22% 4% 14% 12% 15% 10% 8% N/A Debt % 85% 52% 78% 61% 51% 66% 99% 92% 66% OCF % 6% N/A 10% 7% 16% 8% 3% 5% N/A FCF % 2% N/A 1% 3% 9% 4% -2% 1% N/A 1) All figures are based on extrapolations of H results unless otherwise stated Data presented is 2015 annual results because H results are not published yet 3) Flexible segments: Amcor: Flexibles, Coveris: Flexibles, Huhtamaki: Flexible Packaging, Mondi Group: Consumer Packaging ROCE % = EBIT including non-recurring items / (Total Assets Current Liabilities) ROA % = EBIT including non-recurring items / Total Assets ROE % = EBIT including non-recurring items / Total Equity WC % = (Accounts Receivable excl. fin. items + Inventories Accounts Payable excl. fin. items) / Turnover Debt % = Total Liabilities / Total Assets OCF / TO% = Operating Cash Flow / Turnover FCF / TO% = Free Cash Flow excluding Investing Cash Flow for M&A / Turnover 19

20 Despite volatility, average EBIT increased slightly by 0.4% from 2015 to 2016 Segment-only EBIT % of tissue segments (incl. special items) 1) 15% 13% 11% 9% 7% 5% 3% 1% -1% -3% Segment only W. Avg. 2015: 10.3% W. Avg. 2016: 10.7% 1) H weighted average H weighted average Flexible segments: Amcor: Flexibles, Coveris: Flexibles, Huhtamaki: Flexible Packaging, Mondi Group: Consumer Packaging Trends vary across companies. Huhtamaki, Mondi, Coveris and Sealed Air were able to increase flexibles EBIT, while the remaining sector recorded a slight drop 1) 2016 results based on H extrapolations unless otherwise stated Excl. Rengo and Constantia Flexibles 3) 2016 results impacted by volume growth, pricing benefits and forestry fair value gains of segments: Consumer Packaging, Uncoated Fine Paper and the South Africa Division. 4) 2016 results largely due to improvements in the North-Central American Flexibles business unit resulting from continued productivity improvements, procurement savings, decreases in raw material costs, decreases in headcount and downtime, lower waste compared to prior year 5) results have been restated 6) 2014 has been restated 20

21 Working capital increased by 2.4pp in H vs Working capital as % of turnover 1) 20% 22% Flexibles W. Avg. 2015: 7.7% W. Avg. 2016: 10.1% 1) 15% 10% More information available upon request. Please contact Mrs. Kristi Magllara at: kristi.magllara@stepchange.com 5% 0% H weighted average H weighted average Development of working capital levels rather unstable records an increase in working capital levels for all peer group companies. 1) 2016 results are based on H extrapolations unless otherwise stated Excl. Rengo and Constantia Flexibles 3) 2016 result impacted by increase in inventories, decrease in payables results have been restated. 4) results have been restated 21